WRLD - Earnings call transcript Q4 2022 | World Acceptance Corporation

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Operator

Good morning, and welcome to the World Acceptance Corporation sponsored fourth quarter press release conference call. This call is being recorded. [Operator Instructions] Before we begin, the corporation has requested that I make the following announcement. These comments made during the conference call may contain certain forward-looking statements within the meaning of the Section 21E of the Securities Exchange Act of 1934 that represent the corporation's expectations and beliefs concerning future events. Such forward-looking statements are about matters that are inherently subject to risks and uncertainties. any of words as expect, statements. anticipate, will should those identified as believe, than foregoing and the the by estimate, and other historical are well fact those may, similar Statements expressions of forward-looking variation intend, plan,

information year ending President turn implied any to the that press forward-looking is host, statements in the time statements included actual statements such reports from to could to XX-K from the with paragraph and March to time. the fiscal this Risk the your in Chad my for Prashad, of it The recent in pleasure Executive makes. statements. update or and any earnings At or forward-looking Chief release performance not subsequent differ time, obligation forward-looking filed In furnished discussing corporation expectations it floor regarding cause to any Additional SEC section XXXX, XX, to factors Officer. the does and the results expressed over today's most and forward-looking or are Factors undertake corporate Form

Chad Prashad

morning, for thank our fiscal and fourth and year-end call. Good quarter joining earnings XXXX you

questions, like a there up areas that few I'd Before open we to to highlight. are

quarter, First, in for the growth consecutive record we've third experienced origination volumes.

million we the quarter. marketing across this quarter, credit XX%. for approximately all over the million all experienced tighter by in new $XX experiences, surpassed the the to quarter in $XX $XXX this experienced approximately fourth pre-pandemic $XXX by fiscal broad underwriting in customer or from strongest customer as year offerings, at third types increased that XX% approximately And new quarter versus 'XX. and million XX% attribute to volumes In compared gross over customers to increased in year customer midst originations quarter million year-over-year positive by levels. exceptional an increased versus In the originations originations the growth. increases grew record we and and applications intelligence, we portfolio fourth fiscal loan of expansion prior significantly our fourth even loan During quarter quarter. last when and more than larger returning particular, fourth of new fourth see the tremendous to We XX.X% fourth growth loan 'XX continue Further, all, new of prior customer began

We Therefore, likely began will that tightening that we growth our growth credit reduced is the profitability also April this growth slow credit are additional provision in confident rate year. and profitable the that in we and recently extraordinary we as new growth, credit result unsustainable. and recognize is this but reduce in believe at continued higher risk further

quarter. averaging most our beginning size. fourth contributing Another in paydowns and Traditionally, significantly the approximately was factor the XX.X%, lower portfolio to $XXX we approximately recent see XX% runoff runoff lower million for

X% difference This payoffs higher was to around largely words, refunds. higher performing that or quarter's of ledger, equates through only loans, to million subject to a tax In balance into approximate from year. $XX which lump the less runoff just resulting X% new are sum move other fiscal over going $XXX million,

loans several underwriting most and remain the most attractive for to performance, credit in -- of our to our customers. overall remain to near expect best Regarding our to cohort factors, changes relatively Based term. performance retain the environment, consistent we the credit economic on increase origination larger options including

to in our before portfolio real and $XX.XX change It's expect We time when grow Further, of real our provision per to we year CECL our incentive seasonal EPS season. tax is EVA time year, and the XXXX, delinquencies expect provision with in any to we the traditionally share target expectations. that with expectations last runoff, as remain to which of our long-term continue note reduce and important hit accordingly. long-term are confidence end fiscal to to during accruing provisioning grows within

During as provisioning historical to periods The based in of this model. growth especially future decelerate day provisioning quarters, begin positively quarters X when depresses revenue growth of in compared income loan temporary delinquency net CECL growth, impact income to rapid should in we rates. and our

million we've With growth the as reserves being loss increased entire dramatic originated over before, over throughout year, loan in accounting. point we the annual X reduction the unseasonal XX% we've portfolio, mentioned of recent CECL $XXX also years, that achieved during compounded under we the prior experienced the also quarter. year in the last the rate For $XXX I'd out million this that approximately growth, more over our with pandemic. most like to significantly including than fourth

Finally, aside have record about growth, from continued to and much thankful for we our World. at be excited

and those support them job last team safety first. needs years a branch who and of putting our customers' our the First, X have navigating in and done tremendous

continue we our across in this top to win half of country, awards year. with being regions Second, or the over branches states winning workplace

overall about year USA consecutive company the reflecting Strategy our like incredible years, and In At for top our to and prouder culture that winner Calmes, to continues to foster. company being questions has of a factorized be quarter and time, World open I them. X XXXX addition up Chief to only and the created our this Officer; be to workplaces family fiscal fourth would Financial can't of earnings. I Johnny

Operator

Stephens. first [Operator Vincent of question from Instructions] The Caintic comes

Vincent Caintic

First question, just rate. charge-off on the

looks quarter, strong had like past rate growth I it this had quarter. this -- you really XX% you imply charge-offs, loan which So think a would

you'd with charge-offs XX%. rate, with would a growth -- a that it in normal have loan of excess slower imply So

of rate just we over sort go what's should normalized charge-off wondering annual expecting we the as be So time?

John Calmes

Sure. Yes.

last it's in as is quarters, the three that XX% the still year with substantial had little the little has a higher, math which right, was period with if in bit quarter. like obviously, -- had lower. you just back well to go been relative it So have line as might XXXX, but past that. growth been And under with we we've line delinquencies It this in or fiscal a it's growth to

Obviously, So feel we we that growth much as of to borrower about So good portfolio, it QX QX and mix -- age, loss we've projection you to that it fairly that's kind will growth significantly. come it the new relative right? -- to should -- and and be the for of drive -- It's growth right? give we that the that rates a loss quarter going especially all where maybe forward is so what in difficult portfolio But QX our still had. those is rates work should of QX of see way or through. and start the the to a see the X by there's down. a to down will take determined its because lag, should So it then going -- happened

Vincent Caintic

Okay. That's helpful.

So level underwriting? maybe would range? of this mean, you're for sort current point, say, course, for you losses looking it your that comfortable be seems like Or this target that for, is the that hard below assuming to NCO -- your but you're targeting I of a the is -- mix to your

John Calmes

level So as Chad Relative pointed right, over to as more months, especially So of could a we right? that comfortable the X the going don't forward, the new around next we selective, right? see growth, mix we're seen plan expect borrowers we we to shift lot couple move of be that quarters. right? in growth But forward, we the out, where to we've are, same maintain last

Chad Prashad

rate This really that's Yes, to mentioned, a right. around is on dependent, provide net is Johnny as clarity little mix. the portfolio The Chad, more charge-off just that.

new So extremely Johnny's down rates, point fiscal reducing high in underwriting well. And were fourth as already that approval NCO as about go expect this the continue further slow our to lower of throughout they'll from changes mix would much for that you first these and the and to begun quarter the tightening portfolio our to And year. we down quarter, they customers. rate come growth levels, we've as ages, down especially credit

John Calmes

we today. about bit color of little Just where a are

expect, yes, to to, -- yes, as charge-offs we're decrease now, as continues delinquencies, the the right? down follow April decrease as through will March So is So expected charge-offs we will And delinquency that So well. right? delinquency trending we would right? from as

Vincent Caintic

on very That's a And those helpful lines. question Okay. detailed along feedback. follow-up just second, just a a

rates So on changes in you maybe what are kind to April, underwriting that if more detail? or in was payment of any unusual cost else down particular variables the made Or anything there could slowing what the you the maybe just tightening? describe seen the you tighten tightening? the if could maybe those is surprises you've that And describe

Chad Prashad

question. Great Yes. Yes.

of amount improve and and as good application tightening a quarter, a began mostly to third we just this underwriting maintain So credit to tremendous due to the opportunity going in quality do that. use really and flow

moved loans, that them larger we it's risk as us important have is, to into profile second really new make into well. their credit move to loans sure allow the customers as larger The for

qualify initial make fit they we credit as lines retain that profile. we investment make customer, the that higher the them as into would in that can means So to sure when that for possible, quality making that long they we want for sure and future

the perspective in overall what So you tightening look by April. of So before we to fell quarter the credit XXXX. does around look like? question made rate booking like give changes of to those customers -- fourth additional we same that some the changes, XX% underwriting your made compared new To

anything application to prior tremendous And there. in increases So flow. pandemic really we have overall impacting

XX% fourth digitally is the quarter, So vast year-over-year. sourced. majority in were the up that levels, versus XX% And pre-pandemic applications of being

a same this our So have terms an there, an at intelligence and the the large opportunity in and and increase a overall as using tighten marketing opportunity in application it to brand we've culture time. changing underwriting really we done as excitement flow, within we use can job the since so of really branches great

Vincent Caintic

Okay. me. Got And X last for you.

when the call I the think talked $XX earnings EPS growth outlined last you trajectory. XXXX, from targets, fiscal achieving about you by the your

what, you're you Maybe talk digits on path still your those high get think in your I kind X about was, and single of return to with plus that there mind, it still variables? underwriting. that's capital if

Chad Prashad

so chime in let well. mean as start, I Yes. I'll I'll Johnny

rate. how had overall does decelerate X the the that. overall amount it in come year the growth growth of with we've this There's to that we ledger, So down pieces to rapidly really

first is provisioning, we every The upfront. that we we provision existing customers. that to significantly for new is have in than more bring risky And seem customer

in not terms also originations. with provisioning. CECL could but And rapid So this that substantial as quarter, retention, growth, see pretty of we comes a customer record you had just in

towards we're amount press the we believe $XX.XX. comes today for down prudent the that we I we size the well. As as of for in that customers can of are release We down, new investments portfolio think off yes, It that long cash. still see And a slow sure you company. that can that are the to put term accruing that making really for certainly

So we good at long-term are looking of still we're make still applicant every sure opportunistic. to investments. that And those very are EVA the

them. continue those, see we'll we to as So make

So impact demand, we but a it's we're overall our and really difficult repayment rate. to future. We say impact there growth economy specific also percent towards influences, the the may at may any keep influences in think that rates eye aiming that

a to say, certain hit aim portfolio think do rate have we percent size So order We growth we in a today opportunistic. But we to us the aren't to to targets. in so all that be environment. setting that certainly really those decelerating allows growth

Operator

[Operator comes of Rowan Instructions] John next question Janney. The from

John Rowan

So to this growth you're give earnings obviously target giving kind based steady-state wanting an appreciate to NCO a rate in for you XXXX. a of fiscal your to run But environment. you're that target significant not in rate get to underwriting -- off I John, of accrual

to figure look you're give to to? get going feel rate on near historically, that those Maybe X to currently earnings anywhere not exact outlook I us from that Maybe figure. could you're help to you to of ballpark us for XX%. it an buckets said underwriting that rates but that digits low the we single us loss B narrow like if what to as have give a it have loss confidence when the necessarily an So X to your Now -- assumption. number, I have been have to have the down mid-teens back you

John Calmes

forward can you I now, we as a right? customers. been selective This where right the are of going becoming near be is right, we've right, range, So saying, give and new kind that's more the with rate settle fair top, long I right? in the do ages, we as high down. the it can So Long back portfolio I expect think to digits? loss term. single think term, come should

far say. far can future, happen, in right it's mix when to the say, we So that's that always in But will as yes, completely to the rate in now, should there's the to it skewed going the than and going says like hard just Obviously, start a a as B, cut as rate. loss probably it's executive so off as so right? growth, timing don't loss more customer in -- the right? than I So exactly is we be right? some as be borrower need existing risk that our trend position down, where to So portfolio or higher to new Bs

that, high Because trending just from single yes, -- high some where single the hard timing right? over give on So it's towards it's digits, the to the it's digits But we -- time. are in exact

John Rowan

listen, you ever kind Is seeing credits of history lower mean, loss you're with stock time there digit high just is rate I to fundamentally in pre-financial what the in than number I've of the crisis. back and I of enough. while fair World? that's look a covered remember even that embedded a something and the for single that relative No, underwriting different type

John Calmes

rate back the ratio best was again, these shift retain portfolio to -- the So customers the to larger So as and it's for what that's in definitely our loans, there should right? change right? of larger it So So because the be appetite we we'll loss we customer but right I'm can starts on with loans, our of customers, will future, lot because longer, right? the shift right? as saying right? just exact to the right, that, and change -- it the as No, of give mix so size that it appetite that ages, will -- number, be. determined not new move that get mix would risk towards our -- makes by new a portfolio So what loss borrower for difficult that an

Chad Prashad

level said right? John, don't the words. be rate at lifetime, rate acquisition, Johnny in we the don't just hopefully, expect target I we portfolio target if NCO their EVA individual cetera. helpful, it's the So and what cost an have exactly to we an et what over different -- we NCO repeat of really the customer relative But to level,

with at acquisition a of overall lower math that kind go of customer pieces factors that is Once their there's time, that So us of that rate. the lot into customer into the portfolio and been over risk level. has new number dramatically there's NCO go a

as First new you and foremost, customers. was talking about, Johnny have your

rate on the will is, like, customer what -- certainly market the we'll those bring the we overall more which and will make investments impact looks depending their making. return what appetite we're the with be think NCO up So investments accordingly, new

new is is, are part that credit long-term underwriting customers what profile. higher will talking large a about risk for other loan we on just pieces. The the of that, One was looking X loan believe Johnny certainly we're be large customers, as side, there's to we

impacts rate and that X negative NCO has down. bringing to them So the

a First our and with they new the us as foremost, longer, stay well. credit is have that will And customers expectation. lower continue will risk as

lower them interest The competitors lost past, larger the rates is, rate. longer we longer, we're we our NCO have whereas naturally them have larger are may loans second lower at best a retaining customers as our the as we to in to loans, customers and do they retaining move and

than and that has mix setting they could today the the been portfolio to past because being I'll digits come it portfolio most We'll road because the quite already be up is percent customer a ages, certainly is different been much down, the helpful? in on the into but large important is conversation and this base those Is than it portfolio. as that's different of have, different of single has in the hit NCO to the certainly let the is So rates past. see portfolio say, the part the really significantly we with that us

John Rowan

want at attack But top hurdle sheet provision to topic growth the So World kind I No, of the to management right? try the it in is different and first under of charge-offs. to buy with investing hurdles is. teams the methods, the X look the lever XXXX And via in past, basically meet use prior vesting has up stock to balance issue hurdles. back those down,

to it at there if in XXXX? such is up, maybe do any the a to from strategy we So appetite meet vesting look the bottom hurdle

Chad Prashad

question. So the I appreciate

I'll the first. in, first is the think the speak we Board, chime out for I management first a please term But you When really goal incentive possible. to And do. as want team, it's Johnny, plan, as long if us it's insightful. I long-term think from put

of our we incentives, including for part As short-term also that, removed bonuses executive team.

have even hit to don't targets we any So not looking annual annual bonuses. targets. certain We're quarterly or

Our is for build term. our shareholders to asset can the we long valuable most goal

executive team, we as as the to I'm the the of that the long-term So things cliff created of expense get lead vesting here. interested make value it. monkeying asset the to hit really not with the in closer not sure of Certainly we've we at

certainly so this. have perspective that into And I going that's the

couple of back fair float We last the amount the over a of have bought years.

a certain that to looking that's to, at value short repurchase. but forward the very we let's say, any the expense the target necessarily of to decisions might a of be the of long-term term trying future hit into in make terms good as company. to we'll believe And investment we're long that investors, As stock for something opportunistic, we're the again, our and not is price accretive that continue

John Rowan

it more mean, mean little a level, significantly intent was there so Okay. bit a to stated kind obvious. I right? higher -- not move I a to leverage we're I repurchases complete a of from obviously, was appreciate have I good departure time or it. what more don't was rates share now. could And last -- an be on there whether was really seeing thing. overall are leverage a just of I commenting types

So I appreciate insight. the

Operator

session. like This to over conference for concludes I would question-and-answer remarks. our closing turn the Prashad back Mr. to

Chad Prashad

In and and culture to coming operations in year improvements in helped us Corporation. quarters the result fiscal that Earnings continue flow time Thanks will concludes join this are our for Acceptance the for have cash many growth with portfolio to and year World This significant closing, pleased today. the our in believe XXXX generate years. our record to the Call we taking

Operator

now has concluded. conference The for Thank today's presentation. you attending

now may disconnect. You

World Acceptance (WRLD) 7 May 222022 Q4 Earnings call transcript